A Conversation with LGM’s Drew Collier 

On July 1, new legislation was introduced in Quebec. Bill 30 is designed to reshape the finance sector, promoting greater transparency and fairness. For dealers, the impact is significant and represents a big shift in the way F&I transactions are handled with customers. While this remains focused on Quebec specifically at present, these changes could set a precedent for other jurisdictions in Canada to pursue their own reforms. To help understand this shift in F&I practices and what it could ultimately mean for dealers across Canada, Autosphere sat down with Drew Collier, President & CEO of LGM Financial Services.

AS: What do you think are likely going to be some of the biggest impacts dealers are going to feel in Quebec with Bill 30?

Drew Collier: Bill 30 might just be one of the most significant operational shifts that dealers have faced in recent years. Not only because it impacts what they’re selling, but also how they’re selling it, including the revenue mix, the sales process and day-to-day workflows. From that perspective, it has a big impact and at a broad level. Essentially, Bill 30 is moving dealers away from the traditional, single transactional driven F&I model and toward an ongoing, longer-term, customer experience driven approach. Within that context, it fundamentally changes how dealers engage with their customers and deliver value. While in the short term there is no doubt that a lot of dealers won’t be happy with this change, over the longer term, there are great opportunities and it could result in greater customer retention, as well as easier, simpler and more straightforward conversations and transactions with those clients.

AS: The legislation is aimed at promoting fairness and transparency in the financial services sector. With that in mind, how do you think dealers can leverage this reform to ultimately benefit their customers and long term business prospects, by focusing on these attributes?

DC: I’ve felt for a long time that transparency is not just about compliance, but rather about building trust with your customer. In turn, that trust can drive customer loyalty and create a competitive advantage, so when it comes to Bill 30, savvy dealers are going to see this change in legislation as an opportunity to have greater transparency, create that trust with the customer, leading to an easier and simpler sale process. That in turn is likely to result in stronger customer confidence, improving a dealer’s retention prospects and differentiating them themselves as a trusted dealer, one in which the customer is far more likely to want to business with again, when it comes to their next vehicle purchase and the one after that. This is so critically important aspect to creating real lifetime customer value. When a dealer’s client is able to see the real value through a simpler, more transparent sales and F&I process and can clearly understand the value that they’re getting in terms of options—including products and solutions they might need and others they may no longer require for the whole duration of owning the vehicle, that provides them with flexibility, knowing that the dealer is able to adjust the F&I products and solutions to fit their specific needs and factoring in how those needs change over time. I think this is going to be a real benefit of the new Bill 30 legislation, and looking at the longer term, will promote steady, sustainable growth for dealers. 

“I think it’s important to understand that Bill 30 is not just a regulatory update, but really the beginning of a reset of the model for F&I.” 

– Drew Collier, President & CEO, LGM Financial Services

AS: If applicable, can you state some of the key rules around the new legislation that dealers need to comply with going forward?

DC: When Bill 30 was first introduced, there were a lot of questions and every organization was working on ways to come up with solutions, since it represented such a major shift in the financial landscape. At a high level, Bill 30 introduces new requirements around how F&I products are distributed and disclosed in the province of Quebec. Historically, F&I products have been sold at the point of a loan origination. They’re financed, and they’r effectively tied to the loan. Therefore, the customer is locked in for the duration of that loan. Under the new regulations through Bill 30, F&I premiums are no longer tied to the loan period. Instead, the premiums now have to be 12 months or less in duration and they must also be fully cancelable. Think of it like a monthly subscription to your favourite TV or Internet entertainment service—as long as you need it or want it, you keep renewing. The moment you don’t then you can cancel it, such as selling the vehicle you originally applied that coverage to. Because the customer is only needing the insurance coverage for as long as they need it or own the vehicle, that creates a really unique value proposition for the consumer, plus it also takes the pressure of them and increases transparency, as well as promoting fair business practices. I feel there’s a really good opportunity here to have products that are going to be serving both customers and dealers well, particularly over the longer term. There is no question that dealers are going to have to adapt to these changes, with clear separation of products and separate transactions, plus there are now stricter disclosure requirements. This will also require changes in commission structures for salespeople at the dealership. Rather than having a big upfront commission for selling products, we’ll see a more gradual commission structure that’s paid over time, operating within a more structured compliance environment.

AS: If applicable, do you feel this financial reform in Quebec sets a precedent for reform in other jurisdictions within Canada and if so, how do you think it could alter the F&I landscape across the country?

DC: While what we’re discussing currently applies specifically to Quebec, I do feel that Bill 30 represents part of a broader shift in the way regulators are looking at auto retailing and F&I. The Quebec market has been seen as a leader in regulatory changes in Canada. We’ve seen changes to the placement of insurance products and now regulators are focusing on the other loan protection products. Bill 30 essentially reflects the growing expectations around transparency, customer understanding and fairness. Some of the trends we’ve seen in other jurisdictions, as well as in the Quebec market, have been both fairly thoughtful and contemporary. Given Quebec’s approach to regulatory reform in the financial sector, including automotive retailing, it’s reasonable to expect that other jurisdictions and provinces are probably going to follow with their own regulatory changes. While it is unlikely they will take the exact same approach, any changes that do come will still likely focus on the general themes of transparency, trust and consumer fairness, since those aspects aren’t going way. As I mentioned earlier, dealers that embrace these changes are the ones that are going to be ahead and able to seize opportunities to create a positive, genuine and long-lasting customer experience that drives retention and overall profitability—facilitating sales within the framework of longer term and even lifetime customer value.

AS: In working with trusted F&I partners, what do you feel is essential for dealers to navigate successfully through Bill 30, not only in the short, but the long-term?

DC: With all these regulatory changes dealers have to navigate, it can be tricky to ensure everything is executed properly. That’s why dealers need F&I partners they can trust and are able to work with to translate regulatory changes into practical, easy to explain solutions for their customers and for their dealership staff. In essence, it’s about having everyday, effective solutions, but dealers shouldn’t have to do this alone, as there are many good F&I partners out there that can walk them through these changes and provided the necessary support. It’s critically important to partner with somebody who truly understands the regulatory requirements and that a relationship is built upon trust and transparency, much in the same way it is between dealers and their customers. Dealers need to have a great deal of trust in their F&I providers because if something doesn’t smell right, or there are compliance issues, it can create significant problems, for not only both parties but the dealer’s customer. This is particularly important when new regulatory frameworks are introduced and careful planning is essential to not only meet compliance requirements, but deliver a superior customer experience that is consistent and endures for the long term. 

AS: Is there anything else you’d like to mention related to F&I and Bill 30?

DC: I think it’s important to understand that Bill 30 is not just a regulatory update, but really the beginning of a reset of the model for F&I. Essentially, it represents a redefining of the customer experience, moving away from bundled complex offerings toward a simpler, transparent, more value-driven solution that creates greater flexibility for the customer. While this can be a bit disruptive in terms of having to let go of long-established practices, it also opens the door to more meaningful innovations and opportunities. While there are legitimate frustrations around regulatory requirements and the changes taking place, it’s important to understand that these changes are not going away, and over the longer term, there is a real opportunity to see significant and even greater benefits through F&I services—benefits that are driven by true transparency and simplicity that create long-lasting customer trust, loyalty and solid retention for dealers.